Analysis

Who is shaping the future of European health systems?

BMJ 2012; 344 doi: http://dx.doi.org/10.1136/bmj.e1712 (Published 13 March 2012) Cite this as: BMJ 2012;344:e1712
  1. Nick Fahy, independent consultant and researcher
  1. 1Nick Fahy Consulting, Tunbridge Wells TN1 2HX, UK
  1. nick{at}nmfahy.eu
  • Accepted 29 February 2012

The bailout deals for Ireland, Portugal, and Greece include startlingly detailed changes for their national health systems. Nick Fahy asks whether the tighter European rules proposed to save the euro will mean the EU steering national health systems across all of Europe?

Health systems are a central area of national policy; even within the European Union, the primary responsibility of the EU’s member states for their own health systems is explicitly stated.1 However, one of the consequences of the current financial crisis has been that European countries are facing the kind of detailed international involvement in their health systems that has more normally been seen only in developing countries. As part of the international “bailouts” for Ireland and Greece in 2010, and for Portugal in 2011, these countries had to agree detailed economic adjustment programmes with the “troika” (the European Commission, the International Monetary Fund, and the European Central Bank). These programmes include some strikingly detailed prescriptions for change in the health systems.

It is not so much what is being done, but by whom that is important. Health is a major item of public expenditure in all European countries, and all are under pressure to ensure cost effectiveness of their health systems. Moreover, these three bailout programmes were negotiated and agreed—albeit under pressure—between the troika and the national governments concerned. But as the EU moves towards much greater supervision of national budgets, the health systems in all countries may become subject to international requirements like those set out in the bailout agreements and health ministries may need to discuss policy not only with national finance ministries but with the European Commission.

What are the commitments for each country?

Portugal

The programme for Portugal aims to reduce expenditure by €1bn (£835m; $1.3bn) in 2012 and €375m in 2013.2 3 This is equivalent to a total reduction of 0.8% of gross domestic product from a previous health spend of around 6.5% of GDP.4 There are 33 commitments affecting the health system, including a target to limit public spending on pharmaceuticals to 1.25% of GDP by the end of 2012 (around the current level4) and about 1% of GDP by 2013, plus detailed measures on hospital services (especially acute care services) and primary care services (box).

Measures taken in Portugal3

  • Electronic prescription has been made mandatory for medicines and diagnostic tests, in part to enable better monitoring

  • Doctors are being required to prescribe by generic name rather than brand

  • Copayments have been expanded to cover more services

  • Overtime has been cut

  • Fees paid to private providers were reduced by 12.5% in 2011; a further 10% reduction is planned for 2012

The measures seem likely to have a substantial impact on both patients and healthcare workers. Patients will have to pay more towards their care and will get reduced tax allowances for healthcare. The scope of specific healthcare schemes for public sector workers is also being tightened and the maximum number of patients per general practitioner has been increased. Healthcare workers can expect reductions in overtime, more flexible working rules, and requirements increasing mobility of staff throughout Portugal. Hospital performance will be assessed annually and the prescribing practices of individual doctors monitored quarterly. The cost of drugs and other medical products is particularly targeted, with a new centralised purchasing system plus requirements for lower prices and distribution margins and stronger guidelines on prescribing and use of generics.

There are also requirements for restructuring of the health system. These include moving some hospital outpatient services to primary care, increased specialisation and concentration of hospital and emergency services, and reduction of hospital management staff. The aim is to reduce operational costs of hospitals by at least 15% by 2013 compared with 2010. Taken as a whole, the objectives would profoundly challenge any health system.

Greece

The programme for Greece perhaps goes the furthest in setting an overall framework for the health system because it includes an explicit objective of keeping public expenditure on health capped at 6% of GDP (around its current level).5 Greece already has one of the lowest levels of health system expenditure relative to overall resources within the EU—for example, the UK spends 8.2% of GDP, Germany 8.9%, France 9.2%, Portugal 6.5%, and Ireland 7.2%.4

The changes in Greece are principally focused on how the health system is managed and administered. They include consolidation of health insurance funds, more use of e-health such as electronic prescribing, and general strengthening of data collection and central monitoring.

So far success has been limited. The task force commissioned to review overall policy has still not issued its main recommendations, though it is likely to include hospital reorganisation and a reduction in the healthcare staff contracted with the health insurance funds.6 Prescription guidelines have been developed but not yet formally adopted; targets for increased use of generic drugs and reductions in hospital budgets have not been met.7 Tools are being developed for the future—for example, diagnosis related groups are being piloted.

Ireland

The economic adjustment programme for Ireland is the least directive of the three bailout agreements on health.8 Nevertheless, it includes explicit actions “to remove restrictions to trade and competition in sheltered sectors including […] medical services.” It will eliminate restrictions on the number of GPs qualifying and remove restrictions on GPs wishing to treat public patients if they are not contracted to the state to do so. Restrictions on GPs advertising their services will also be removed, and there will be changes in fees for pharmacists.

Where might this go in the future?

In December 2011, the Eurozone leaders agreed a set of much stronger tools for oversight of all Eurozone national budgets, not just those of countries seeking bailouts.9 The aim is to have tighter European monitoring of national budgets. Moreover, the EU (minus the UK and the Czech Republic) is moving towards a new treaty that will further reinforce European oversight of national budgets.10 At the same time the EU adopted a new package of legal rules that provides for financial sanctions on countries that do not keep their budget deficits below 3% of GDP and government debt below 60% of GDP, as set out in EU economic rules.11 This will affect nearly the whole European Union, with only Finland, Sweden, Luxembourg, and Estonia currently within those overall criteria (fig 1).

Figure1

Fig 1 Budget deficit and government debt in countries breaching EU economic rules11

Health will inevitably become a central part of discussions about public finances because health systems account for too much money to ignore. Across EU governments, health is typically the largest area of government expenditure after social protection (social security) (fig 2). And health is, of course, one of the main areas of public expenditure that is projected to come under additional pressure from demographic ageing.12 Health ministries will need to be ready to engage in dialogue about their policies not only at national level but also with the European Commission. Although there is already some dialogue at European level about health system policies (which has provided some of the basis for the recommendations in the bailout agreements),13 there have been no sanctions for not following any of the recommendations. This seems likely to change with the move towards stronger European oversight of public finances.

Figure2

Fig 2 Breakdown of average EU government expenditure by function, 2009 (Eurostat data)

Health is also under particular pressure in these wider discussions because it is the area of public expenditure that is seen as having the greatest potential for improved productivity, holding out the hope of being able to get more results for less money. The wide variations that exist within and between European countries in terms of cost14 and outcomes of health systems suggest scope for substantial efficiency gains.15 This is less possible with social protection issues such as pensions, for which entitlements are defined and there is little opportunity to save money through improving efficiency or productivity. This difference in potential is reflected in the bailout programmes, which include many fewer provisions for other areas of large expenditure such as pensions, education, or housing than they do for health (though the financial impact for citizens of some of the measures on pensions, for example, is undoubtedly substantial). It also indicates that health systems are likely to become an increasing part of wider European discussions on sustainability of public finances.

The UK angle

The pressures for health system reform also apply to the UK, and not only because the UK is required to meet the EU’s overall economic rules despite being outside the Eurozone. The UK’s Office of Budget Responsibility identifies health as being the largest age related increase in UK public expenditure in the coming decades.16 Moreover, it also identifies efficiency in the health sector as a variable that will substantially affect overall levels of UK public debt. According to the office’s projections, if productivity growth for the health sector over the coming decades turns out to be 1% rather than the 2% assumed for the economy as a whole, then the UK’s public debt by 2060-1 would more than double from 107% of GDP to well over 200%—much higher than that of the most indebted country in Europe at the moment. So clearly efficiency and productivity of the health system are going to be central topics in the UK as elsewhere in Europe.

Conclusion

One of the less visible consequences of the financial crisis has been for much increased involvement of international organisations in running national health systems. As the EU moves toward more collective supervision of national budgets, the kinds of requirements made in the bailout agreements may be the future for health systems throughout the European Union. Regardless of how sensible the individual measures may be, this would be an important shift towards a stronger role for European Union institutions in the future of national health systems.

Notes

Cite this as: BMJ 2012;344:e1712

Footnotes

  • I thank Pereira Miguel, Mendes Ribeiro, Kathi Apostolidis, Ispabel de la Mata, and Tiago Alexandre Carvalho dos Santos for their comments and suggestions.

  • Competing interests: The author has completed the ICJME unified disclosure form at www.icmje.org/coi_disclosure.pdf (available on request from the corresponding author) and declares no support from any organisation for the submitted work; no financial relationships with any organisation that might have an interest in the submitted work in the previous three years; and no other relationships or activities that could appear to have influenced the submitted work. NF was formerly head of the health information unit of the European Commission.

  • Provenance and peer review: Commissioned; externally peer reviewed.

References